Quebec and Canada's Major Banks: History, Founders, and What They Finance

Understanding the Canadian and Quebec banking system means understanding why it fails to serve thousands of SMBs every year. Here is the history of the major institutions, what they have become, and where their limits lie.

Canada's Major Banks (the "Big Six")

Royal Bank of Canada (RBC) — founded 1864

Founded in Halifax, Nova Scotia, as the Merchants Bank of Halifax by a group of local merchants including John William Stairs. It becomes the Royal Bank of Canada in 1901 and moves its head office to Montreal. Today the largest Canadian bank by assets (over $1.9 trillion), with more than 17 million clients. RBC is known for its strict commercial financing criteria — SMBs under 3 years old with limited credit history have very little chance of obtaining a commercial loan.

Toronto-Dominion Bank (TD) — founded 1955

Born from the merger of the Bank of Toronto (1855) and the Dominion Bank (1871). The Bank of Toronto had been founded by Ontario farmers and millers who wanted access to agricultural credit. Today TD is Canada's second-largest bank and one of the ten largest in North America. Its network extends into the United States. TD has a reputation for being slightly more accessible than RBC for small businesses, but the same basic restrictions apply.

Bank of Montreal (BMO) — founded 1817

Canada's oldest bank, founded in Montreal by a group of merchants including Austin Cuvillier, one of the first French-Canadian politicians. BMO is the first chartered banking institution in Canada. Its head office has been in Toronto since 1977. BMO offers several SMB-dedicated programs, but its financial history requirements remain high for new businesses.

Bank of Nova Scotia (Scotiabank) — founded 1832

Founded in Halifax by a group of Nova Scotian merchants. Scotiabank is today Canada's most international bank, present in over 30 countries, with a strong presence in Latin America. Its Canadian SMB financing division exists but is often less competitive in the Quebec market compared to local competitors.

Canadian Imperial Bank of Commerce (CIBC) — founded 1961

Born from the merger of the Canadian Bank of Commerce (1867) and the Imperial Bank of Canada (1873). The Canadian Bank of Commerce had been founded by William McMaster, an Ontario senator and successful businessman. CIBC is today particularly active in residential mortgage financing and personal services rather than SMBs.

National Bank of Canada — founded 1859

The only major bank whose head office has remained in Montreal. Founded as the Banque Jacques-Cartier to serve French Canadians who had little access to the English-speaking financial institutions of the era. It becomes Banque Provinciale du Canada in 1900, then merges with Banque Nationale in 1979 to create the National Bank of Canada. It is the most "Quebec" of the major institutions — it better understands the local market and offers products better suited to French-speaking SMBs.

Desjardins Movement — A Different Kind of Institution

Desjardins is not a bank in the legal sense — it's a financial cooperative founded in 1900 in Lévis by Alphonse Desjardins, a journalist and stenographer at the Quebec Legislative Assembly. Appalled by the usurious rates charged against Quebec workers and farmers, he created the first caisse populaire in Canada to allow ordinary people to save and borrow among themselves at reasonable rates.

Today, Desjardins is the largest cooperative financial group in North America with over 7 million members in Quebec and Ontario. Its cooperative model distinguishes it from traditional banks — profits are redistributed to members rather than shareholders. Desjardins is generally perceived as more accessible to Quebec SMBs than federally chartered banks, particularly for micro-enterprises and self-employed workers.

Other Important Quebec Institutions

Laurentian Bank — founded 1846

Founded in Montreal as the Montreal City and District Savings Bank, renamed Laurentian Bank in 1987. Focused on the Quebec market, it concentrated on individuals and local SMBs. In 2024, Laurentian Bank went through a major restructuring, focusing increasingly on its B2B digital platform.

Investissement Québec (IQ)

Not a bank but a Crown corporation founded in 1998 by the Quebec government to support economic development. IQ offers loans, loan guarantees, and equity investments to Quebec businesses, especially those having difficulty accessing traditional financing. Its processes are however slow (weeks to months) and its criteria, though different from banks, remain rigorous.

BDC — Business Development Bank of Canada

Founded in 1944 as the Industrial Development Bank, it becomes the BDC in 1995. It's a federal institution dedicated to Canadian SMBs that cannot obtain sufficient financing from private banks. The BDC offers loans at rates often slightly above banks but with more flexible criteria. Its processing times remain several weeks.

Why Do Banks Reject So Many SMBs?

The answer is structural. Major banks manage trillions in assets with strict regulatory obligations (Basel III and IV agreements). They must maintain high capital ratios and minimize loan losses. In this context:

• A $50,000 loan to an SMB requires the same administrative work as a $2M loan to a large corporation, but generates much less revenue.
• Standardized evaluation algorithms cannot capture the reality of an individual business.
• Post-2008 regulations tightened regulatory capital criteria, making SMB financing even less attractive for major banks.

It is in this space that alternative financing has emerged and continues to grow — to serve businesses that the traditional banking system cannot or will not efficiently serve.